ALBERTSON'S, LUCKY 'WED'; 508 BANNERS ARE CHANGED

ELLIOT ZWIEBACH

BOISE, Idaho -- Albertson's here and Lucky Stores "tied the knot" in mock wedding ceremonies last week as the retail giant converted more than 500 Lucky units in California and Nevada to the Albertson's banner.

The move ended speculation as to which name Lucky would use following Albertson's acquisition of Lucky's corporate parent, American Stores Co., Salt Lake City, last June. Observers predicted the name change could lead to fierce promotional battles among competitors.

In the Los Angeles "nuptials," Gary Michael, chairman and chief executive officer of the nation's second-largest chain, walked down the aisle with Romeo Cefalo, president of Albertson's southern California region, and later the two executives fed each other wedding cake.

Similar mock weddings featuring corporate and regional executives took place simultaneously in northern California and Las Vegas.

When Albertson's acquired Lucky, it was required to divest 124 of its 177 California and Nevada stores and 40 Lucky locations. As a result, at the time of last week's conversion, Albertson's was operating 53 stores under its own name and 508 Lucky's in the two-state area.

Asked if Albertson's was considering putting the Albertson's name on other former American Stores divisions -- Acme Markets, Malvern, Pa., and Jewel Food Stores, Melrose Park, Ill. -- Michael told SN, "Not at this time."

In other announcements last week:

Michael said Albertson's will drop Lucky's Reward Card program immediately and replace it with its own Bonus Buys program, which provides product discounts to all customers without use of a card. "Bonus Buys has been very successful for us and gives customers exactly what they want," Michael told SN.

He said he does not expect customers to switch to other chains that offer loyalty cards. Asked whether the company will use point-of-sale materials or bag stuffers to explain the value of Bonus Buys vs. the cards, Michael said, "You can expect a lot of [promotional] action from us."

He also said Albertson's will introduce a "best-neighbor" policy in California and Nevada, under which it expects to distribute approximately $25 million annually through donations of food to food banks and shelters; a grant initiative in which nonprofit companies can apply for awards of up to $50,000; and contributions to local youth-oriented organizations based on members' purchases.

Michael said the Lucky stores have responded well to changes since Albertson's assumed ownership more than four months ago. "We've really brought them way up," he said, although he declined to be more specific.

Gary Giblen, New York-based managing director of Nationsbanc Montgomery Securities, San Francisco, told SN Albertson's is eliminating the Lucky banner "because the Lucky name has become tarnished as more operators offer everyday low prices, and that may have contributed to the decision [on which name to use]."

He also said Albertson's is likely to lose some Lucky customers, "because changing banners always puts customers up for grabs, and Albertson's may have a difficult time convincing skeptical consumers that savings from Bonus Buys will be equivalent to savings from Lucky's card program."

As Kroger Co. and Safeway, Albertson's two primary West Coast competitors, go after those up-for-grabs customers, "I expect to see a really ugly promotional bloodbath through the holidays. Making the name change just before the holidays instead of waiting till January indicates Albertson's plans heavy promotions -- possibly as much as $50 million in the fourth quarter -- and all three companies may suffer in the short term.

"But the burden of proof is on Albertson's to hold or regain those Lucky customers."

Making the decision on which banner to fly in California and Nevada was difficult, Michael said, "because we had two great brand names. But our research indicated there were more Lucky customers who said they would shop at Albertson's than Albertson's customers who said they would shop at Lucky, and that led us to our final decision."